Foreclosure Laws

Foreclosure laws vary by state, but are often patterned after each other. Realtors, investors, and professionals involved in the foreclosure process should take time to familiarize themselves with the laws that govern foreclosure transactions in their state.

In addition to the core judicial and non-judicial foreclosure codes, a handful of additional laws have been routinely put in place to protect consumers, homeowners, and those in financial distress, from falling victim to those who might take advantage of their misfortune by offering them unrealistic solutions to their financial problems. These laws include equity purchase laws, foreclosure consultant laws, and rent skimming.

Equity Purchaser Laws

Equity purchaser laws are designed to protect homeowners from equity predators. These laws typically impose the use of specific contract language, cancellation periods, and impose penalties for making false or misleading statements to entice someone to sell their home.

Foreclosure Consultant Laws

Designed to protect homeowners from Save My Home scams, these laws regulate the sale of services to homeowners in foreclosure. Services offered by specialists in "getting people out of foreclosure," may include offering to help stop the foreclosure, modify the loan in foreclosure, or collect funds after the foreclosure. Typical laws impose cancellation periods, prohibit excess proceeds, and place restrictions on requiring payment in advance for services performed.

Rent Skimming

During foreclosure, it is not unusual for homes to be left vacant. Rent skimming laws make it unlawful to rent a property you do not own. A common scam is to find a vacant home, advertise it for rent, collect first and last months rent, and then abscond with the money, leaving the renter to find out later they are in the home illegally. Owners who continue to collect rent payments from tenants after their property has foreclosed, are also rent skimming.

Foreclosure Laws by State:

California Foreclosure Laws